Turkey’s Market Watchdog Defends Stock Curbs, High-Speed Trading

Turkey’s top market regulator dismissed speculation that pandemic-era trading limits will be lifted, calling the measures vital for market stability.

Omer Gonul, chairman of the Capital Markets Board, said the curbs — which were tightened in 2020 to counter price swings — remain crucial for protecting retail investors from excessive risks. The most a stock can climb or fall in a daily session is currently set at 10% versus the previous day’s close.

The restrictions, along with a ban on short selling introduced during the same period, have reshaped Turkey’s equity market, leaving it dominated by local investors rather than foreign funds. With the shorting ban set to lift for the top 50 stocks in 2025, market participants have been speculating whether other easing steps could follow.

Meanwhile, Gonul defended the role of algorithmic trading, which has drawn criticism for creating an uneven playing field, particularly in periods of thin trading volume. 

“If you’re investing for the medium or long term, algorithms aren’t your concern,” he said in an interview with Bloomberg. “For daily traders, they’re simply part of the market dynamic. These practices are legal and regulated by the exchange.”

The Borsa Istanbul opened up to algorithmic and high-frequency traders after it moved to the Nasdaq system in 2015 following an upgrade to its systems.

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Gonul also addressed criticism that the regulator hasn’t been selective enough in vetting the country’s many IPOs, with some arguing that companies with questionable fundamentals have gone public. 

The share offerings were a major draw for retail investors: the new-listings index tripled in 2020 and nearly quadrupled in 2022 as individual investors sought refuge from inflation by piling into newly listed stocks.

The gains have faltered since mid-2023 as Turkey’s central bank tightened monetary policy this year, cooling investor enthusiasm.

Gonul said the board’s primary responsibility is to ensure accurate disclosure in prospectuses, not to dictate which companies investors should back. “If you don’t trust a company, you shouldn’t invest in it,” he said.

Other highlights from the interview:

With assistance from Tugce Ozsoy.

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